The Government knew about a plan which could have reportedly retrieved more than £360 million from Carillion before it collapsed but did not encourage the firm’s directors to pursue it.

It is understood that the Cabinet Office did not consider it appropriate to advise the construction giant on business decisions despite the proposals reportedly put forward by accountants EY in mid-December last year.

According to the Guardian, EY believed breaking up the company, selling the profitable parts and placing the rest into liquidation would have generated £364 million, of which £218 million could have be put into the company’s pension schemes, which are hundreds of millions of pounds in deficit.

The Government was aware of the plan but did not pressurise Carillion to put it into action, and is understood to have been focusing on ensuring public services run by the outsourcing giant continued.

At the time, the Government was holding weekly meetings to monitor the firm’s health.

A Cabinet Office spokeswoman said: “Throughout this process, Government has been clear that its priority is to ensure that public services continue to run properly, and we regularly meet with our strategic suppliers and monitor their financial health.

“Since the collapse of Carillion, our plans have ensured that public services can continue to run as normal.”

A total of 1,371 Carillion workers have lost their jobs since the company went into liquidation in January.

Shadow Cabinet Office minister Jon Trickett said: This is astonishing. The Government were asleep on the job, the question is why.

The first explanation is a blind ideological commitment to outsourcing, that private is always better than public even when its blindingly obvious that the public sector needs to intervene. The second is that theyre preoccupied with infighting over Brexit.

The public purse, the staff, recipients of Carillions services and the pension fund are all suffering as a consequence of Government failure.